Turnquest rejects PLP criticism of GDP performance

Minister of Finance Peter Turnquest rejected criticism from the opposition over gross domestic product (GDP) statistics released earlier this week by the Department of Statistics.

The figures revealed that while the Bahamian economy grew by 1.6 percent in 2018, growth which was less than projected by the government.

Shadow Minister of Finance Chester Cooper was unimpressed with the figures, and said the growth had nothing to do with the Free National Movement (FNM) administration, but instead was a result of growth in the U.S. economy.

Cooper also called for an explanation as to why the actual growth was short of the 2.2 percent projections for 2018, and questioned whether last year’s increase in value-added tax (VAT) rate was to blame for the softer than expected number.

“I note the critics, and the fact of the matter is that they have no basis for any criticism in this regard, given the track record,” Turnquest said outside Cabinet.

“And, so, it is somewhat amusing to hear the opposition, Mr. Cooper, make the statements that he makes, because he has no legs to stand on in this argument.

“Again, the fact of the matter is that we’ve had positive growth.

“We’ve had strong economic performance, all indicators point towards the strengthening of the economy, and that is the positive that needs to be taken from this statistic.”

Turnquest also said Cooper’s questioning of the negative impact of the VAT increase was unsubstantiated.

“With respect to the value-added tax, the facts do not bear that out,” he said.

“The facts are that since January when we had the full implementation of the 12 percent, that our value-added tax projections have trended towards the projections.

“The fact of the matter is that we have had positive growth over the last two years, consistent growth. And that is a positive thing, and so trying to pick any one piece of this thing apart will fail, because the fact of the matter is the overall economic indicators point to continued sustainable growth.”

The minister assured that recent economic growth is sustainable.

“If you look at where the growth is coming from, primarily from the private sector, that bodes well for the future, because it means that there is no artificial inflation of that growth rate,” he said.

“That’s a pure, organic number, and that is a very positive thing. We are somewhat below what we anticipated the growth rate being, and we are analyzing what that means and where the lag may be.

“But again, the positive news is that tourism is tremendously gaining strength, and we are at almost record levels in terms of our tourism growth. We are very, very strong and sound [in terms of] our fiscal reserves with the Central Bank.

“We have a growing list of private enterprises that are getting business licenses.”

He added, “So the fundamentals of the economy are strong. We have every reason to believe that it will continue on this path towards greater growth, and we look forward to the new year coming to show the effects of that in the downstream into the pockets of the average Bahamian.”

Asked what contributed to the GDP growth being weaker than anticipated, Turnquest said it is still unclear.

“These are projections based upon known factors,” he said.

“Sometimes things happen in the economy, things happen globally that may affect that projection.
“Even a delay in the start of a project can have an effect.

“So, we have to do some analysis ourselves to see what, if anything, we can do to help push it along, but at this point we are not aware of any specific drags that would have caused us to not meet the projection other than just normal delays.”
Turnquest also said it was only natural that tourism would be the primary contributor to economic growth, as it is the largest industry in the country.

Questioned on the FNM’s promise to diversify the Bahamian economy to reduce its dependence on tourism and finance, the minister conceded that things have not been moving as quickly as the government had hoped.

“We’re making progress, obviously not as quickly as we would like, but if you look even within the tourism sector and how we’re trying to diversify that sector and broaden it to a more national perspective,” he said.

“When you look at the work that we’re doing in the Small Business Development Centre, where we’re trying to encourage organic, natural, sustainable, renewable type businesses.

“We are making every effort to ensure or to help facilitate this broadening that we’re talking about.

“The investments in agriculture, again trying to broaden this economic base so that we can try to take out some of the peaks and valleys that happen as a result of recessions and global events that have an effect on tourism.”